New Organization to Help Higher Ed Donors Attach Strings to Gifts

September 23, 2007

(Sept. 24, 2007) Citing concerns over accountability and donor intent, three foundations have created a nonprofit group that will assist donors in attaching legally enforceable conditions to their gifts to colleges and universities.

The Marcus Foundation in Atlanta, the John William Pope Foundation in Raleigh, N.C., and the John Templeton Foundation in Radnor, Pa., have launched the Center for Excellence in Higher Education, based in Indianapolis. The center’s mission is to improve higher education by empowering donors to use their charitable gifts to create accountability, transparency and results.

The center will advise major donors (those with $1 million or more to give) on techniques to ensure that their gifts are used in the way they were intended. According to The Wall Street Journal (“Big-Money Donors Move to Curb Colleges’ Discretion to Spend Gifts,” Sept. 18, 2007), some of the funding techniques the center is espousing include:

Contributing smaller gifts over a period of time, as opposed to a larger sum to an endowment

Setting up the gift as an annuity within a trust that would be overseen by a third-party who would then determine when the donor’s intent had been met

Providing financial support for a single professor, instead of endowing a professor’s chair in perpetuity

The center already has three main initiatives underway, according to Inside Higher Education (“New Watchdog for Donors,” Sept. 19, 2007):

Providing help to donors through reviewing grant agreements, editing program proposals, discussing gift ideas and setting up meetings with school officials

Developing grant competitions whereby the center pools together funds from donors interested in similar causes, and schools submitting proposals to receive those funds

Holding scholarly meetings and supporting other groups to address issues related to accountability, oversight and college rankings.

Collaboration or Overreaction?

The creation of the new center comes on the heels of several high-profile controversies at institutions of higher education, including Princeton University in Princeton, N.J., Tulane University in New Orleans and Randolph College in Lynchburg, Va., all centering on intended use of donors funds.

Some in the education sector are worried about the message that the creation of the center sends to the general public about the state of relations between donors and institutions of higher education.

John Lippincott, president of the Council for Advancement and Support of Education (CASE) in Washington, D.C., noted in the Inside Higher Education article that 90 percent of donations made to colleges come in some restricted form. “The fact that giving to American higher education has been doubling every decade is a sign of professional and solid relations between donors and universities,” he said. “There’s an enormous track record of success. Have there been a few high-profile instances of disputes? Yes. Are they in any way indicative of a widespread problem? I see absolutely no evidence of that.”

Frederic Fransen, executive director of the center, admits that some colleges are concerned about the center and “the idea of another hand in the philanthropy process.” However, he also points out that other organizations are excited about the idea because the center can bring new donors into the process who either haven’t been identified as prospective donors by colleges or universities or who might have shied away from giving to such institutions.